Organizations across the globe continue to rethink their supply chain strategies, and as a result, more mergers and acquisitions are reshaping the way in which supply chains handle final mile logistics. For some, an acquisition offers the opportunity to enter the final mile space and deliver more e-commerce packages, but others may experience losses in their competitive advantage. Regardless, shippers need to understand how mergers and acquisitions affect final mile logistics and their potential impact on the ability of a company to enable final mile differentiation and superior customer service.
Driving Forces of the Consolidation of Final Mile Service Providers
The driving forces of consolidation within the industry through mergers and acquisitions are simple. They derive from the fundamental logistics business operations–such as increasing cash flow and complex business decisions. Moreover, today’s customers expect the world, and they want faster, free, and no-holds-barred service. Companies may simply lack the physical resources to offer better last mile service across a larger footprint, and others cannot yet gain visibility into the carrier-specific processes of larger and smaller carriers. Since the majority of carriers are those of fewer than five trucks within a fleet, these barriers could undermine efficiency and transparency.
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Unfortunately, major hurdles to improving efficiency and unlocking final mile differentiation remain. As explained by Supply Chain Quarterly:
“Everyone agrees that effective manufacturing and logistics practices are crucial for improved financial performance. Yet many of the typical tactics for increasing productivity and reducing costs post-merger—such as closing plants, laying off workers, and reducing wages—end up disrupting the supply chain and result in poor operational performance and reduced revenue. Instead of short-term cost-cutting measures, supply chain rationalization efforts should focus on long-term productivity gains such as eliminating redundancies and creating synergies. These long-term projects may include streamlining the sales organization, merging product offerings, and consolidating the production of intermediate components. In situations where there is vertical integration (for example, between a manufacturer and a distributor), there usually are more opportunities to create synergies than to eliminate duplication. One area that deserves attention is the inventory that is being carried between the manufacturing entity and the distribution company.”
That is until a larger company or newly formed partnership allows companies to break down the barriers and finally achieve greater growth.
Final Mile Differentiation Depends on the Customer Experience
The customer experience is the result of the steps and actions taken to speed final mile delivery service.As customers grow in their expectations, service levels must increase. Therefore, final mile differentiation does depend on successful customer service experiences.
Of course, another view exists. The customer service levels reflect the final mile capabilities of a company. With higher service levels, customers are more likely to share positive experiences on social media, reorder products, and encourage their family members or friends to shop with a company. While this occurs in the purview of the shipper, it’s natural implication involves the ability to work together with last mile service providers to guarantee a better experience and enable true final mile differentiation of services.
Best Practices to Improve Final Mile Throughout Mergers and Acquisitions
Shippers need an advantage throughout mergers and acquisitions. To avoid risk and keep service levels and competitive advantage through final mile differentiation top of mind, C-suite executives must follow these steps:
- Be transparent regarding potential mergers and acquisitions, sharing information publicly when the company deal is in the final stages. The biggest challenges in managing mergers and acquisitions occur following poor communications with employers and customers. Maintain throughout the whole process. More visibility is also key to keeping customers and your supply chain partners informed of what is happening.
- Never tear down IT infrastructure until all new integrations and services have been deployed and are actively working within the new controlling company’s tech stack. While the newer company may offer steep advantages in eliminating your excess servers and migrating software, it is important to never prematurely shut down your software or backups until they have been deployed and are error-free within a new live environment, connecting with last mile drivers and managing the end-to-end supply chain.
- Avoid sudden changes to pricing or service levels during mergers and acquisitions. Customers have a historic predisposition to respond negatively to mergers and acquisitions, so you must never change pricing service levels drastically with the immediate time after an acquisition or merger.
- Work with supply chain leaders in your warehouses, retail facilities, suppliers, and other facilities to encourage positive change management and relieve fears over job stability. Employees are always worried about job security, and those fears are amplified within the current economy. If your new partner or overseeing company uses robotics, make sure to address the “Robot Apocalypse” worries and how robotics enable faster, safer workplaces, not fewer employees. It may also be prudent to touch on the realities of drone deliveries in the final mile too.
- Consider a new strategy for explaining processes to team members–such as creating weekly or daily reports on what is occurring and how it will benefit employees. This strategy should reflect the goals of the corporate restructuring or movements and always end with a positive note.
- Give customers a clear view of who to contact regarding complaints, comments, or other concerns. A key problem during mergers and acquisitions arises when customers become confused and unsure of who to contact.
- Offer new services, emphasizing why and how they are better through the merger. New services and features can go a long way in making your company stand apart from the crowd. As consolidated services become more commonplace, you must have a final mile differentiator that shows the business behind any corporate change. In other words, start offering newer capabilities quickly, but take care to not overwhelm customers or change pricing structure too drastically.
Set Your Services Apart With Disruption-Free Delivery Through Corporate Restructuring
Corporate change is hard, but the potential rewards far outweigh the challenges. Companies that have consolidated their services through mergers and acquisitions need to maintain business continuity by applying the aforementioned steps and being as transparent as possible. Furthermore, shippers should start thinking about how to set their final mile services apart from the crowd now, focusing on value and positive effects granted to customers through such acquisitions.